Fines Loom as PG&E Ducks CPUC’s Data Requirements

The California Public Utilities Commission and Pacific Gas and Electric agreed on a penalty of at least $3 million for failure to supply all its records for pressure tests of natural gas pipelines in high-consequence areas (HCA) as requested earlier this month.

Photo courtesy of NTSB

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The deal was reached March 24 during a CPUC “Order to Show Cause” hearing on the matter. The commission will discuss the order Monday, March 28, before an administrative law judge with a final decision made “thereafter,” says the CPUC.

The CPUC’s Executive Director Paul Clanon says the stipulated outcome would fine PG&E $6 million in shareholder funds for failure to comply with the CPUC’s order and would require PG&E to operate under a compliance plan to complete the CPUC’s directive. Of the $6 million, $3 million would be immediately payable to the state’s general fund, and $3 million would be suspended if PG&E hits milestones in its records search process and completes its records search for information on grandfathered pipes by Aug. 31.

PG&E failed to satisfy CPUC’s terms under a March 15 deadline to provide data on its pipeline system. The utility says it supplied records for pressure tests or historical operating pressure for more than 90% of its 1,805 miles of natural gas transmission pipelines in HCAs. The CPUC shot back that it’s the “historical operating pressure” records that violates its demand.

CPUC directed PG&E on Jan. 3 to undertake urgent National Transportation Safety Board (NTSB) safety recommendations following the Sept. 9, 2010 San Bruno explosion. PG&E says it started right away in reviewing its records and on March 5 moved “tens of thousands of boxes” of documents to the Cow Palace arena in South San Francisco, assigning hundreds of employees and contractors to sift through piles.

A day after the deadline, CPUC’s Clanon sent a letter to Christopher Johns, PG&E president, telling the utility that the commission didn’t find “traceable, verifiable and complete records” that were required in the first place.

In PG&E’s 154-page report on Maximum Allowable Operating Pressure(MAOP) validation, a paragraph on page 7 reads: “PG&E understands the intent to be to identify reliable records confirming the performance of a pressure test or the determination of MAOP based on the historical high operating pressure.”

“PG&E has no legitimate or good faith basis for the conclusion quoted in the report,” writes Clanon. “As you well know, the whole purpose of the NTSB’s urgent safety recommendations, and for the commission’s directive to PG&E, was to find, to the extent possible, a basis for setting MAOP by means other than the grandfathering method described in PG&E’s response.”

PG&E will tell its side of the story at the hearing. Penalties and fines for not complying range from $20,000 per day for a single violation up to $1 million.

PG&E was put on the defensive following the blast that killed eight people and destroyed 38 homes.

NTSB’s January recommendations were based on its findings that PG&E’s actual installed pipe in Line 132, the line in San Bruno that ruptured, was not consistent with its as-built drawings.

Overall, the CPUC says PG&E “appears to have attempted merely to justify the practice of setting MAOP for pre-1970 pipelines based entirely on historical high operating pressure.” The San Bruno pipeline was installed in 1956.

“I can understand some of the CPUC’s perspective though I don’t speak for them,” says Richard Kuprewicz, a pipeline safety consultant in Redmond, Wash. “I’ve seen a lot of pipeline operations in my almost 40 years and certain records or information [don’t] get lost, missing, misplaced or destroyed no matter how old…The CPUC or the public [may] decide the operator has lost control of their operations and I hope we don’t get to that point.”

PG&E told the CPUC that it would continue to search for the missing as-built drawings, though it may take the rest of this year. The utility also presented an in-line inspection and field-test plan with “smart pigs” and new camera technologies, as well as plans for additional pressure testing and pipeline replacement.

In other news, Senators Dianne Feinstein and Barbara Boxer (both D-Calif.) asked the federal Pipeline and Hazardous Materials Safety Administration to close a loophole allowing utilities to not report most instances in which a pipeline is operated above the MAOP.

The senators told Cynthia Quarterman, PHMSA administrator, that even though federal law requires each operator of a transmission pipeline facility to submit a “written report on any condition that is a hazard to life, property or the environment,” regulations only require pipeline operators to report accidental cases in which the MOAP is exceeded if the operators are unable to correct the malfunction within five days.

“Nowhere do we find any obligation to report intentional pressure spikes over the MOAP,” write the senators, who add that they found mention of this loophole while reviewing regulations that could prevent another San Bruno event.

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